A State By State Accounting Guide

AICPA Expresses Concern over Federal Agencies’ Proposed Changes to Form 5500

Posted January 16th, 2017 by admin and filed in Uncategorized

Back in July several federal agencies including the Department of Labor (DOL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corp. jointly filed a proposed revision of Form 5500. Since then, the American Institute of CPAs (AICPA) has expressed concerns that some, not all, of the proposed changes could result in inconsistencies and confusion.

According to the DOL, the Form 5500 Series was developed as a way for employers to document employee benefit plan reports in compliance with requirements set forth by the Employee Retirement Income Security Act (ERISA).

The revisions suggested by the federal agencies were intended to:

  • Enhance the reports submitted by employers.
  • Upgrade financial data regarding benefit plans.
  • Align annual reporting requirements with DOL-issued requirements.
  • Enable to reports and returns to be more data mine accessible.

While the AICPA ultimately supports the move toward revision, the association sent comment letters to the DOL on November 22 outlining its chief concerns. For instance, the proposal:

  • Asks plan sponsors to provide more information to ensure proper preparation of Form 5500, which could prove both costly and time-consuming, yet does not offer reasons for the request.
  • Requires independent plan qualified public accountants (IQPAs) to expend further time laboring over new information needed to be recorded in supplemental schedules and the drafting of audit-related disclosures in Schedule H.
  • Issues additional fees of plan sponsorship in order to comply with new requirements. As a result, sponsors looking to cut costs may transfer these fees onto plan participants.
  • Mandates more work at more cost, which may provoke plan sponsors to reconsider sponsorships or limit benefits.

In terms of reaching an acceptable solution, the AICPA is encouraging federal agencies to hold public hearings to give both the agencies and the stakeholders the space to compromise conflicting viewpoints before the proposal is officially finalized.

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